According to a new survey from MoneyRates.com, 79 percent of respondents have had a specific “financial scare” in the past and 87 percent have money fears about the future.
Of those 87 percent, the top fear is not having enough for retirement. Some other fears:
Debt: 31 percent have had credit-card balances or other bills they could not pay off immediately.
Carelessness: One in 10 admit to having forgotten to pay a bill, thus incurring late charges.
Bounced checks: Three times as many men as women say that an NSF situation was their worst financial scare.
The underlying theme of many of the fears cited? Not having enough money to build an emergency fund, says study author Richard Barrington.
Even if you have a decently funded retirement it’s likely that life will bring unpleasant surprises – a leaky roof, the need to put in a wheelchair ramp – that could knock your budget sideways.
If you forget to pay a bill, the late fee creates a disturbance in the Force. Having your car vandalized (which happened to me) means you’ll have to fork over a deductible before those windows can be replaced.
The lingering effect
As with horror movies, our real lives contain a supremely scary factor: the fear of the unexpected. Layoffs, serious illness, a surge in utility costs – film writers refer to these as “jump scares,” i.e., things that come out of the blue and scare you silly.
This isn’t necessarily just a momentary “gotcha!” Sometimes financial jump scares do more than terrify you – they make you want to crawl into bed and pull the covers tight to your scalp. This can worsen the situation, e.g., you miss another payment or go shopping to make yourself feel better.
“Building an emergency fund is a fundamental step in financial planning. Having that cushion allows you to have less fear of the unexpected,” Barrington says.
People who are already living on the margins find it tough to build that EF, but there’s really no substitute for having one. My former MSN Money colleague Liz Weston notes it doesn’t have to be three to six months’ worth of living expenses touted by some financial wonks.
In fact, the enormity of that challenge might keep some people from trying: The way things are going, how in the world could I ever amass that much cash?
Instead, aim for an EF of $500. Most budgets can be tweaked a bit here and there to automate at least $10 a week into an untouchable account. If not? Automate $10 a month. The Internet is rife with frugal hacks and budgeting tips; you’re almost certain to find some that fit your situation. (For specific tips see my Woman’s Day article, “Trick yourself into saving.”)
Achieving a specific purpose
Those tweaks might not always be fun, mind you. Suppose going to the movies or having two beers with friends every Friday night is your one big treat in life. You work so hard and mostly do without so you can pay off your student loans/consumer debt/mortgage and fund retirement. Are you supposed to do without any enjoyment at all?
It’s possible to hack those things, too: Go only to the second-run house vs. on opening day, paying with discounted gift cards, inviting people over to split the cost of a 12-pack of craft brews and play board games or watch TV.
Yet even if those tweaks aren’t fun they’re part of being an adult. Sometimes you do what you need to do, not what you want to do, to achieve a specific purpose. That half-a-grand EF can go a long way toward dealing with many unpleasant surprises.
It’s not a complete solution, but at the very least it represents $500 less being put on a credit card.
My own financial bogeyman is the bag-lady dream. I say this not to denigrate homeless women but rather to describe a fairly common fear of having no place to live and nowhere to go. In my case it also includes the fear of having to ask for help, i.e., being a drain on someone else.
Marge Piercy wrote a marvelous novel called “The Longings of Women,” in which one of the main characters is a 60-ish housekeeper named Mary. Winding up homeless after divorce, Mary copes, barely. Yet she never tells her daughter, who lives in another state, because she doesn’t want to be a burden. Reading it, I wondered how many men and women whose sense of pride ultimately caused them to lose their dignity, and safety.
So, readers: What’s your personal financial bugaboo, and what measures have you taken to keep it at bay?